The Science of Flipping - How Is The 2021 Economic Recovery Going To Help Us Real Estate Investors?

Episode Date: July 27, 2021

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What is up, everybody? What is up? Welcome back to the Science of Flipping Podcast. I am your host, Justin Colby, and on this episode, I wanna talk to you just about unemployment. What's going on with the market? What is happening with our recovery

and how this can affect us wholesalers and flippers? And for you people like myself trying to buy as many rentals as possible, what market should we be in and what's actually really going on? So stay tuned to this episode. All right, well, here's the deal. I am actively now in seven different states wholesaling and flipping, and I'm also trying to buy as many rentals as I possibly can right now, as long as they make

sense. Now, for those of you trying to buy rentals, I keep to a very specific BRRRR model, nothing overly creative. If I can buy it and repair it, and I can refinance out almost as much as I can get to 100% of my money, And as long as it has the 1% rent rule, meaning if I'm all in for 150 grand, if I could be making $1,500 a month, I will likely buy it. Now, those deals aren't as easy to come by as you would think, but I am trying to do my best to buy as many as possible. I'd encourage you to do the same. Now, this isn't about how to burr. This is really about understanding unemployment and how that actually affects your real estate investing strategy. So ultimately, guys, what I would see here is I have a great article from CNN Business that I was doing a

deep dive on. They gave me all sorts of statistics from Moody's Analytics. And essentially, the economy for unemployment has bounced back in a major, major, major positive way. We were at a point of 23 million people reporting that they were unemployed. Now we're at 2.3 million people as of July of 2021. And that's a huge step. Now, no, I don't want 2.3 million people being unemployed, but relative, you are

talking about just 10% of the highest peak. Now, are there states still having high unemployment? Absolutely. Does that mean all 50 states are out of the red? No, but it does mean the majority of these states and a handful are actually surpassed their unemployment rate, meaning they actually have more employment now than they did before COVID. And there's a handful of those states that actually exist. And how this all affects me, my business, and how it can affect you is making decisions on where you want to be investing. I buy in markets that don't necessarily have this massive amount of appreciation. It's not necessarily my concern, but what will be my

concern is making sure these people can pay their rent. I want to make sure there's some level of industry. For example, I was looking at buying 70 homes in Albany, Georgia. I don't believe I'm going to buy them at this point, but what I started doing is a dissection of what kind of industries are there. Well, Budweiser is there and Miller is there. And so it does bring in a pretty steady amount of unemployment, but there's really no growth. There is a college there, Albany College, but there's not really much growth. There's no other industries coming in.

So I don't see a lot of appreciation and I don't see a lot of new employment opportunities. So I'm ultimately gonna pass on that. Now, if those same 70 properties were, let's say, in Atlanta, that might be a different story as it's a much bigger city. And I do believe there's going to be more growth in Atlanta in years to come. Now, when it comes to my wholesaling business and my fix and flip business, what I want to make sure is similar ideas. But if you have no growth opportunity, there's not going to be an influx of people coming. Then being able to rehab and

flip a property and not get top dollar just scares me, right? So people who are flipping in Phoenix, people who are flipping in Miami, people who are flipping in LA and San Francisco, they're making a ton, a ton, a ton of money right now. And I know there's other markets, but if you are in a market that doesn't see, and I'll call out where I'm buying some rentals is in Oklahoma, specifically like Shawnee, Oklahoma, there's just not a lot of growth. There's not going to be a lot of appreciation. So am I looking to buy, rehab, and flip in Shawnee or multiple parts of Oklahoma City? The answer is going to be no. But would I wholesale there or buy and hold? Absolutely. So I really am looking at this data, which is incredibly positive that, listen, there are a lot of markets right now that are incredibly good for all wholesalers and flippers. And there's a lot of markets, depending upon how you want to be holding your portfolio, that will make sense for you to be buying and holding.

But do yourself a favor. Look at the data. You want to make sure you're not in markets that necessarily have 7, 8, 9, 10% unemployment. You want to be in the twos, threes, fours, fives because the higher the unemployment, the more likely you're not going to have the right people to be able to buy the property.

So if you're a wholesaler and you're spending a bunch of money trying to find a property for somebody, but there's no one out there that can buy the end product, meaning the flipped property or the rental property, well, then you're going to have a tough time selling it as a wholesaler. So this really, this, you know, data specific analytics, really specifically to unemployment really can affect your business. Now, here's the reality. When I boil all this down, guys,

I'm just trying to help you think like I think, but here's the reality is the market's on fire, right? Like I'm personally a home buyer trying to buy in Miami right now and have been now for 30 to 45 days, or maybe even longer. You can't even get close to the right price in the right area. Wholesaling is murdering it for us

right now. We're doing great. Flipping is doing great. I would tell you guys, just be wary. Make sure that you're actually choosing, because at some point, all this beautiful, fun music and puppy dogs and rainbows, at some point, it'll end, everybody. So just make sure you're in the right markets that you don't have too much leverage where it could tank because i do believe some markets are really going to take a hurting and ultimately you just have a better decision making ability when you look at the analytics who has what jobs are there a lot of people that can afford to live there and if so is there any other industry that is coming to increase that unemployment ratio? And if that's the case, I like the market.

And so this is all about making sure you're in the right markets and how I'm looking at it. Hopefully this found you guys well. If you have not yet gone over to YouTube, make sure to go to youtube.com forward slash Justin Colby. I drop three different videos a week, all about business, real estate and entrepreneurship. If those things interest you, go to my YouTube channel and subscribe,

like my videos. The YouTube gods love it. And ultimately, I will see you guys on the next podcast. Holla. Peace.